Correlation Between Cigna and Anthem

Can any of the company-specific risk be diversified away by investing in both Cigna and Anthem at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cigna and Anthem into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cigna and Anthem Inc, you can compare the effects of market volatilities on Cigna and Anthem and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cigna with a short position of Anthem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cigna and Anthem.

Diversification Opportunities for Cigna and Anthem

0.84

Correlation Coefficient

Cigna  Anthem

Very poor diversification

The 3 months correlation between Cigna and Anthem is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cigna and Anthem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anthem Inc and Cigna is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cigna are associated (or correlated) with Anthem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anthem Inc has no effect on the direction of Cigna i.e., Cigna and Anthem go up and down completely randomly.

Pair Corralation between Cigna and Anthem

Assuming the 90 days horizon Cigna is expected to generate 0.6 times more return on investment than Anthem. However, Cigna is 1.66 times less risky than Anthem. It trades about -0.14 of its potential returns per unit of risk. Anthem Inc is currently generating about -0.22 per unit of risk. If you would invest  29,662  in Cigna on April 23, 2025 and sell it today you would lose (4,377) from holding Cigna or give up 14.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Cigna  vs.  Anthem Inc

Cigna

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cigna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Anthem Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anthem Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cigna and Anthem

The main advantage of trading using opposite Cigna and Anthem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cigna position performs unexpectedly, Anthem can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Anthem will offset losses from the drop in Anthem's long position.

The idea behind Cigna and Anthem Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.